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01/10 16:58
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: strong financial performance with increased net bookings and revenue, but significant goodwill impairment and high operating expenses raise concerns. The Q&A section reveals management's optimism but also avoidance of specific details on impairments and development costs. The ambitious GTA VI project poses risks, and no shareholder return plan was announced. Overall, the positive aspects are balanced by uncertainties and lack of clear guidance, leading to a neutral sentiment prediction for the stock price movement.
Fourth Quarter Net Bookings $1.58 billion, up from previous year, driven by strong performance from NBA 2K25, Zynga, and Grand Theft Auto Online.
Recurrent Consumer Spending Growth 14% increase year-over-year, accounting for 77% of net bookings, with NBA 2K growing over 40%.
GAAP Net Revenue (Q4) $1.58 billion, a 13% increase year-over-year, reflecting better than expected performance across multiple titles.
Cost of Revenue (Q4) $779 million, down 16% year-over-year, primarily due to lower impairment of acquired intangibles.
Operating Expenses (Q4) $4.6 billion, up 44% year-over-year, due to a $3.6 billion impairment expense related to goodwill and acquired intangible assets.
Fiscal 2025 Net Bookings $5.65 billion, at the top of guidance range, with recurrent consumer spending growing 7%.
GAAP Net Revenue (Fiscal 2025) $5.63 billion, a 5% increase year-over-year.
Cost of Revenue (Fiscal 2025) $2.6 billion, down 17% year-over-year, due to lower impairment of acquired intangibles.
Operating Cash Flow (Q4) Outflow of $45 million, better than forecasted outflow of $200 million, due to timing of tax payments and lower development costs.
Capital Expenditures (Q4) $169 million, above forecast of $140 million, primarily due to higher game technology expenses.
Operating Expenses (Fiscal 2025) $7.5 billion, up 28% year-over-year, due to impairment charges recorded during Q4.
Management Basis Operating Expenses (Fiscal 2025) Rose 11% year-over-year, slightly above guidance due to higher development costs.
New Product Launches: Successful launches of Sid Meier’s Civilization VII, WWE 2K25, and PGA TOUR 2K25.
Upcoming Titles: Anticipated releases include Mafia: The Old Country and Borderlands 4.
Mobile Game Releases: WWE 2K for Netflix is set to launch in the fall.
VR Launch: Civilization VII VR launched for Meta Quest 3.
Market Positioning: Grand Theft Auto VI is expected to release on May 26, 2026, with unprecedented consumer anticipation.
Market Expansion: NBA 2K Online in China remains the number one PC sports game.
Mobile Market Growth: Zynga's Color Block Jam is a top 10 downloaded game in the U.S. Apple App Store.
Operational Efficiency: Cost of revenue decreased by 16% to $779 million due to lower impairment of acquired intangibles.
Recurrent Consumer Spending: Increased 14% over last year, accounting for 77% of net bookings.
Strategic Shift: Implementation of a cost reduction program to enhance profitability.
Long-term Growth Strategy: Plans to release approximately 38 titles through fiscal 2028.
Earnings Expectations: Take-Two Interactive Software, Inc. missed earnings expectations with a reported EPS of $1.09, below the expected $1.10.
Operating Expenses: Operating expenses increased by 44% to $4.6 billion, primarily due to an impairment expense of $3.6 billion related to goodwill and acquired intangible assets.
Development Costs: Operating expenses rose 3% year-over-year, which was above guidance, due to higher development costs for titles not technologically feasible.
Recurrent Consumer Spending: Recurrent consumer spending growth is expected to be flat compared to fiscal 2025, with declines anticipated for mobile and Grand Theft Auto Online.
Regulatory Issues: The company believes there is a greater opportunity to expand its direct-to-consumer channel given recent court rulings.
Market Competition: The mobile gaming market remains highly competitive, with Zynga's ability to launch hits being crucial for maintaining market share.
Future Releases: The ambitious development of Grand Theft Auto VI poses risks related to meeting consumer expectations and project timelines.
Economic Factors: The company anticipates potential economic factors affecting consumer spending, particularly in the mobile gaming sector.
Upcoming Titles: Take-Two plans to release 13 titles in fiscal 2026, including Mafia: The Old Country and Borderlands 4.
Grand Theft Auto VI: Expected release on May 26, 2026, with unprecedented consumer anticipation.
Zynga Integration: Zynga has become integral to Take-Two, with strong mobile performance and numerous titles in development.
Direct-to-Consumer Business: Record performance with opportunities for expansion in this channel.
Fiscal 2026 Net Bookings: Projected to range from $5.9 billion to $6 billion, representing 5% growth year-over-year.
Recurrent Consumer Spending: Expected to be flat compared to fiscal 2025, representing 76% of net bookings.
Operating Cash Flow: Expected to be approximately $130 million.
Capital Expenditures: Planned at approximately $140 million for game technology and office buildouts.
Fiscal Q1 2026 Net Bookings: Projected to range from $1.25 billion to $1.3 billion.
GAAP Net Revenue Q1 2026: Expected to range from $1.35 billion to $1.4 billion.
Operating Expenses Q1 2026: Planned to range from $908 million to $918 million.
Shareholder Return Plan: Take-Two Interactive has not announced any specific share buyback or dividend program during this earnings call.
The earnings call highlights strong financial metrics, including raised net bookings outlook and recurrent consumer spending growth. Management's confidence in new releases and strategic focus on quality content suggest positive sentiment. Despite a softer release for Borderlands, optimism remains for future launches. Analysts' questions indicate acknowledgment of strategic positioning and growth potential. Overall, the company's strong financial performance, ambitious pipeline, and positive analyst sentiment suggest a positive stock price reaction.
The earnings call highlights strong financial performance, particularly in NBA 2K engagement and recurrent consumer spending. Despite slight deceleration in mobile growth guidance, other areas like Grand Theft Auto and Toon Blast show robust growth. Shareholder returns and capital allocation strategies are positive, with opportunistic buybacks. The Q&A reveals some uncertainties in advertising revenue and economic impacts, but overall sentiment remains positive due to strong product performance and strategic planning.
The earnings call presents a mixed picture: strong financial performance with increased net bookings and revenue, but significant goodwill impairment and high operating expenses raise concerns. The Q&A section reveals management's optimism but also avoidance of specific details on impairments and development costs. The ambitious GTA VI project poses risks, and no shareholder return plan was announced. Overall, the positive aspects are balanced by uncertainties and lack of clear guidance, leading to a neutral sentiment prediction for the stock price movement.
The earnings call presents mixed signals: strong net bookings and revenue growth, especially in key franchises, are offset by significant impairment charges affecting operating expenses. The Q&A session reveals management's optimism but lacks clarity on key issues like Zynga's impairment and post-GTA VI performance, suggesting potential concerns. The fiscal guidance aligns with expectations, yet the substantial goodwill impairment and increased operating expenses temper the positive financial metrics. The absence of a clear structural change explanation and cautious guidance on future performance contribute to a neutral sentiment.
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